Stop Accepting Unreasonable Fees

[Surf Cat]

So, any appraiser that takes an assignment from an AMC is not competent?

I'm certain competent, ethical, well educated appraisers take AMC assignments... because it's the biggest game in town.

Based upon the many appraisals that came across my desk from AMC's....they do appear to attract the bottom of the barrel, poorly trained, boilerplate using, Skippy. The lack of reasoning, devoid of creating a clear, logical roadmap that connects the property's features directly to its final value conclusion is jaw dropping.....The lender funded the loan based on this??

This circles back to what
OverImprovement stated.... the lenders don't care.

 

[Surf Cat]

And what would you do if you inherited 1,000 properties a day, spread all over the country?

Certainly not appraisals.....

 

[DWiley]

So you are saying AMCs are unable to manage at scale.

I said no such thing. That is exactly what they do and exactly exactly why they exist. They manage at scale what others choose not to.

So, same question - if you were inheriting 1,000 properties a day, would you take the approach you suggested and interview them all, or seek another solution? The point is that you analogy is not valid. Lenders are not managing one property or one loan at a time.

 

[Joe Flacco]

The main difference with how AMC manage the panel and how banks manage the panel is that banks are more careful about who they place on the panel. Then they let the appraisers do what they do. AMC puts anybody on the panel and then orders from the cheapest fee.

There is a right way to do it and the AMC way is not it

 

[Dublin ohio]

The main difference with how AMC manage the panel and how banks manage the panel is that banks are more careful about who they place on the panel. Then they let the appraisers do what they do. AMC puts anybody on the panel and then orders from the cheapest fee.

There is a right way to do it and the AMC way is not it

I work for one lender owned AMC that is very "picky" and has a limited panel. But in general you are corrrect.

 

[J Grant]

I said no such thing. That is exactly what they do and exactly exactly why they exist. They manage at scale what others choose not to.

So, same question - if you were inheriting 1,000 properties a day, would you take the approach you suggested and interview them all, or seek another solution? The point is that you analogy is not valid. Lenders are not managing one property or one loan at a time.

My question is, if this is the analogy, why aren't the lenders paying for the professional management of 1000 properties a day?

A private person who inherited 1000 properties a day would have to pay a cost from their own funds to get the properties managed.

The lenders offload their responsibility to manage the properties by outsourcing it to an AMC, yet the lender does not have to pay a hard cost for the service The borrower covers it under the appraisal fee, yet due to a lack of disclosure in most states and the disclosure, when it is given, coming afterward in the appraisal, the borrower did not know upfront about the appraisal fee split to an AMC nor they know the large amount the AMC was keeping out of the appraisal fee. (The basis of the borrower's lawsuits.)

 

[John Hassler]

This is the crux of the matter.....if the laws weren't in the books that an appraisal is required for a federally related transaction, the "profession" would be gone already.....Yes, I know....specific exemptions and thresholds have been in flux under current regulations allowing waivers, desktops, PDC's instead of an old school valuation as we all know it.

Certainly the federal requirement of an appraisal for FRTs has been a boon for the appraisal industry, but this is only because some/most lenders want federal charter and it’s benefits such as insured deposits, federal backstop, and access to overnight funds. The general downside to this is the negative lending incentives that are created by this disconnect of risk to reward.

 

[DWiley]

My question is, if this is the analogy, why aren't the lenders paying for the professional management of 1000 properties a day?

A private person who inherited 1000 properties a day would have to pay a cost from their own funds to get the properties managed.

The lenders offload their responsibility to manage the properties by outsourcing it to an AMC, yet the lender does not have to pay a hard cost for the service The borrower covers it under the appraisal fee, yet due to a lack of disclosure in most states and the disclosure, when it is given, coming afterward in the appraisal, the borrower did not know upfront about the appraisal fee split to an AMC nor they know the large amount the AMC was keeping out of the appraisal fee. (The basis of the borrower's lawsuits.)

They do what they do for one reason - they can. Frankly, I have never understood why lenders are allowed to pass through the appraisal cost to the borrower. It is for the lender. Why is it not just a direct cost to the lender. What's next, allowing them to pass through a pro rata share of their rent, electric bill, etc?

On the other hand, even if it was all paid by the lender, with no borrower reimbursement, I don't think that would change much about appraiser fees. It would just change who is looking at appraisers' fees so hard.

You often talk about how direct lenders are not as fee sensitive. Well, of course they're not. They aren't really writing that check. The borrower is. So, its good for you in that case.

But when the AMC gets the exact same benefit, you do not like it. I totally appreciate why you do not like it, even though you do not see the irony of your argument against it.

 

[J Grant]

They do what they do for one reason - they can. Frankly, I have never understood why lenders are allowed to pass through the appraisal cost to the borrower. It is for the lender. Why is it not just a direct cost to the lender. What's next, allowing them to pass through a pro rata share of their rent, electric bill, etc?

On the other hand, even if it was all paid by the lender, with no borrower reimbursement, I don't think that would change much about appraiser fees. It would just change who is looking at appraisers' fees so hard.

You often talk about how direct lenders are not as fee sensitive. Well, of course they're not. They aren't really writing that check. The borrower is. So, its good for you in that case.

But when the AMC gets the exact same benefit, you do not like it. I totally appreciate why you do not like it, even though you do not see the irony of your argument against it.

I appreciate your response.

The appraisal is for the lender, but it benefits the borrower in that (if an appraisal is needed), the borrower needs the appraisal to get the loan funded.

But the borrower does not need the AMC to service the management for the lender - a lender is capable of doing it themselves, as we all know. The lender, though, can be cheap and lazy at the same time - and get the borrower to cover it. Difference from the appraiser's fee.... the borrower is not informed upfront that part of their appraisal fee goes to the AMC - they assumed their appraisal fee goes to the appraiser, and the borrower is not informed upfront about the amount of the appraisal fee the AMC keeps ( basis of the lawsuits )

Let me ask you something - do you think if the borrower was informed, upfront, that their appraisal order was to be managed to an AMC, and that the AMC would bid out their appraisal, flea market style to find the cheapest /cheaper appariers fee, even if that meant bypassing a more expeirenced /competngt appraiser? ( when that other appraiser's fee was covered by the borrower fee)

I sure would object as a borrower if I was informed upfront about that.

Where is the mission of public trust? Does it mean letting the AMCs and lenders deceive borrowers by not disclosing upfront that an AMC will be used, and that a key metric of AMC choosing an appraiser is how little they can pay the appraiser so the AMC can keep as much as possible from the appraisal fee?

I am not going to lie and say my main sympathy is with the borrowers. My main sympathy is with the appraisers, who have suffered far greater harm via income loss than any individual borrower. However, borrowers deserve to be fairly treated and disclosures made to them, upfront, about where their appraisal fee goes and that the AMC will auction their appraisal order to appraisers for bvee bids or compare fees to find the cheapest appraiser fee they can find for the order so the AMC can get maximum profit.
I bet most borrow3ers would not happy to learn that. They never objected because they had no idea it was going on.

 

[John Hassler]

I said no such thing. That is exactly what they do and exactly exactly why they exist. They manage at scale what others choose not to.

So, same question - if you were inheriting 1,000 properties a day, would you take the approach you suggested and interview them all, or seek another solution? The point is that you analogy is not valid. Lenders are not managing one property or one loan at a time.

Again, it’s a scale issue. Add appraisers to your panel only as fast as you can do so competently. Personal interviews are great, review of work samples (which was the norm in the 1980s and 1990s), monitor at intervals after they are on your panel. You don’t get a pass because it’s hard, takes time, costs money, and, well, we have 1,000s of appraisals to order. I mean, the sole job of an AMC is to manage appraisers.

The first point of contact most appraisers have with an AMC is a phone call from low level staff with minimal appraisal knowledge asking for turn time and fee. I have never had an initial AMC contact asking about qualifications, experience, or designation. I have had that experience that from private parties and local banks; in other words, from entities who had a vested interest in the appraisal.